The story of Chicago’s office market continues to revolve around its biggest buildings — and its biggest challenges. Willis Tower, the city’s largest office asset at 233 S. Wacker Drive, is a prime example.

Once the tallest building in the world, the 3.8-million-square-foot tower was reappraised recently at $1.03 billion — down more than 40% from its $1.78 billion valuation at securitization in 2018 and below the $1.3 billion loan balance held by Blackstone. The asset entered special servicing earlier this year during negotiations to extend the loan maturity to 2028, but returned to the master servicer in April. Despite the repricing, the loan has remained current throughout. A stabilization scenario in the appraisal suggests a potential value of $1.2 billion by early 2027.

Originally built in 1973 and renovated in 2018, Willis Tower had an 87% occupancy rate as of January. United Airlines anchors the building with 730,000 square feet leased through 2033. Other tenants include Morgan Stanley, as well as national law firms, including ArentFox Schiff and Faegre Drinker.

The property also continues to generate steady income: Net operating income reached $119 million in 2024, according to details in the loan modification report.

While the more-than-40% value reduction puts Willis near the lower end of recent markdowns, it’s not alone. In Q1, 601W Cos. acquired 303 E. Wacker Drive for $63 million — roughly 65% below its last sale price in 2018. This discounted deal shows how valuation resets are starting to unlock transaction activity.

Office sales in Chicago reached $759 million through April, more than triple last year’s pace, per the latest figures from CommericalEdge. That marks the fifth-largest sales volume nationwide and the highest total in the Midwest.

In other market fundamentals, Chicago was among the few metros nationwide to see a slight improvement in vacancy, standing at 19% in April — below the 19.7% national average. Meanwhile, asking rents averaged $27.75 per square foot, the highest in the region. Additionally, construction remains constrained with just 600,000 square feet underway across the metro — the smallest pipeline among major U.S. markets.